Germany's coming gerontocracy: the political dangers will be immense.

Author:Sinn, Hans-Werner
 
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Germany's demographic time bomb is ticking. Baby boomers born in 1964 are now fifty years old and plan to claim their retirement benefits in fifteen or even thirteen years' time. However, the combination of a growing number of pensioners and far fewer younger people is leading to an almost unsolvable and highly predictable generational conflict. In 2000, one hundred working-age people (age 15-64) had to finance twenty-four people of retirement age (age 65-plus). In 2011, this number had risen to thirty-one retirees. In fifteen years, it will be forty-seven. In twenty years, fifty-five pensioners will have to be supported, more than twice as many as at the beginning of this century.

In the OECD birth statistics, Germany ranks quite low: with 8.4 births per thousand inhabitants in 2012, it edged out of the last-place position that it had held for some time. Now it is second-last ahead of Japan. And this was only possible because of immigrants, whose children now make up one-third of newborns in Germany. Without them, the country would still be relegated to last place in the birth statistics.

Baby boomers still have no idea what is in store for them, because they benefit from a fortuitous and historically unique situation. Never in the history of Germany have fifty-year-olds had to support so few old and young people, in relative terms, as today. This pattern will never return. Baby boomers have been able to finance their parents with the help of their many siblings; the financing of their children was no problem because they had so few. Thus, much money was left over for unprecedented consumer spending. But in about fifteen years, the good life will abruptly turn into despair when the bulk of baby boomers retire, expecting to be supported by children that don't exist. The descent from consumer bliss to old-age poverty will be sudden, deep, and painful.

The political dangers of this development are immense. Baby boomers will use their political clout to escape foreseeable old-age poverty by imposing growing burdens on their limited number of children. As early as 2002, in a paper I authored with Silke Ubelmesser, we predicted that the numerical political majority of the younger generation would end in 2015. Thereafter, the voters old enough to benefit from increases in pensions will have more influence than those who, on balance, stand to lose over the course of their lifetime. Germany is becoming a gerontocracy.

The...

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